Interim Rule Amending Summary Plan Description Regulation

SUMMARY: This document contains an interim rule amending the

information required to be contained in the Summary Plan Description

(SPD) required to be furnished to employee benefit plan participants

and beneficiaries under the Employee Retirement Income Security Act of

1974, as amended (ERISA). Specifically, this rule amends the

information required to be disclosed in the SPD with respect to the

Newborns' and Mothers' Health Protection Act of 1996. The amendment

contained in this document will affect group health plan sponsors,

administrators, fiduciaries, participants and beneficiaries.

DATES: Effective date: This amendment is effective November 9, 1998.

Applicability date: Administrators will be required to comply with

this amendment no later than the date on which the first summary of

material modification (or updated SPD) is required to be furnished

participants and beneficiaries following the effective date of this

amendment.

Comments: Written comments on this interim rule must be received by

November 9, 1998.

ADDRESSES: Interested persons are invited to submit written comments

(preferably three copies) concerning this amendment to: Office of

Regulations and Interpretations, Room N-5669, Pension and Welfare

Benefits Administration, U.S. Department of Labor, 200 Constitution

Avenue, NW., Washington, DC 20210, ATTENTION: SPD Content Interim Rule.

All submissions will be open to public inspection in the Public

Disclosure Room, Pension and Welfare Benefits Administration, Room N-

5638, 200 Constitution Avenue, N.W. Washington, D.C.

FOR FURTHER INFORMATION CONTACT: June Solonsky, Office of Regulations

and Interpretations, Pension and Welfare Benefits Administration, (202)

219-8521. This is not a toll-free number.

SUPPLEMENTARY INFORMATION:

A. Background

The Newborns' and Mothers' Health Protection Act of 1996 (NMHPA)

amended ERISA by adding a section 711.1 ERISA section 711

establishes restrictions on the extent which group health plans and

health insurance issuers may limit hospital lengths of stay for mothers

and newborn children following childbirth. In an effort to ensure that

participants and beneficiaries are apprised of the limitations

established under NMHPA, paragraph (d) of section 711 provides that

``[t]he imposition of the requirements of this section shall be treated

as a material modification in the terms of the plan * * * except that

the summary description required to be provided * * * with respect to

such modification shall be provided by not later than 60 days after the

first day of the first plan year in which such requirements apply.''

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\1\ Pub. L. 104-204, enacted on September 26, 1996.

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On April 8, 1997, the Department published interim rules

implementing the provisions of section 711(d) by amending the SPD

content regulation, at 29 CFR 2520.102-3, to add a new paragraph

(u).2 Paragraph (u) requires that group health plan SPDs

provide a statement indicating that ``group health plans and health

insurance issuers offering group insurance coverage generally may not,

under Federal law, restrict benefits for any hospital length of stay in

connection with childbirth for the mother or newborn child to less than

48 hours following a normal vaginal delivery, or less than 96 hours

following a caesarean section, or require that a provider obtain

authorization from the plan or insurance issuer for prescribing a

length of stay not in excess of the above periods.'' In the preamble to

the interim rule, the Department explained that the statement included

in paragraph (u) may be used as sample language by plan administrators

to satisfy the content requirement of paragraph (u) and section 711(d).

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\2\ 62 FR 16979, April 8, 1997.

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B. Amendment to Interim Rule

Since the publication of that interim rule, concerns have been

raised whether the specific information delineated in paragraph (u) of

Sec. 2520.102-3 adequately informs participants and beneficiaries of

the exception to the Federal law's general rule. In particular,

concerns have been expressed about the absence of any indication that

the 48 hour/96 hour minimum stay provisions do not apply in any case in

which the decision to discharge the mother or newborn prior to the

minimum length of stay otherwise required is made by the attending

provider in consultation with the mother. Given the significance of

this exception, the Department has determined that these concerns have

merit, that the current rule governing the disclosure of NMHPA

provisions should be amended, and that such amendment should be

effective on an interim basis, consistent with the current disclosure

requirement. In this regard, the Department is amending the language in

paragraph (u) of Sec. 2520.102-3 to clarify that the attending

provider, after consulting with the mother, may discharge the mother

and newborn earlier than 48 hours following a vaginal delivery

3 or 96 hours following a cesarean section. It is the

Department's view that this language is more consistent with the

language in section 711(a) of ERISA.4 The statement included

in this amended paragraph (u) of the regulation may be used by

administrators as sample language to satisfy the requirements of that

paragraph.

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\3\ A separate interim rule being issued by the Department

addressing the substantive requirements under the NMHPA makes clear

that the reference to ``normal'' vaginal delivery is merely intended

to distinguish vaginal deliveries from cesarean section deliveries.

All vaginal deliveries, whether with complications or without

complications, are subject to the 48-hour length-of-stay

requirement.

\4\ The amendment also reflects editorial changes intended to

improve the clarity of the statement.

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C. Effective Date

The interim rule contained in this document is effective November

9, 1998. Administrators will be required to comply with this amendment

no later than the date on which the first summary of material

modification (or updated SPD) is required to be furnished participants

and beneficiaries following the effective date of this amendment.

Consistent with the implementation of the NMHPA amendments through

the adoption of interim rules,5 the Department has

determined that there is need to ensure that participants and

beneficiaries are, consistent with Congressional intent,6

apprised of the NMHPA provision as soon as practical, and that the

current language governing the disclosure of such provisions, at

paragraph (u) of Sec. 2520.102-3, does not, in the Department's view,

adequately accomplish the statutory mandate for such disclosure. Given

the nature of the amendment and the need to ensure that participants

and beneficiaries are adequately apprised of the NMHPA

[[Page 48373]]

provisions, the Department believes that issuance of a notice of

proposed rulemaking with a period for comments prior to issuing a final

rule would unnecessarily delay the implementation of this essential

guidance. In this regard, the Department notes that pursuant to ERISA

section 734, the Department has the authority to promulgate any interim

rules the Secretary deems are appropriate to carry out this part. For

the reasons discussed herein, the Department is adopting this amendment

on an interim basis.

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\5\ Id. at 16982-83.

\6\ See ERISA section 711(d).

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D. Request for Comments

While the amendment contained herein is being adopted on an interim

basis, the Department is inviting interested persons to submit written

comments on the amendment for consideration in the development of a

final rule. Written comments (preferably three copies) must be

submitted to: the Office of Regulations and Interpretations, Room N-

5669, Pension and Welfare Benefits Administration, U.S. Department of

Labor, 200 Constitution Avenue, NW., Washington, DC 20210, ATTENTION:

SPD Content Interim Rule. All submissions will be open to public

inspection in the Public Disclosure Room, Pension and Welfare Benefits

Administration, Room N-5638, 200 Constitution Avenue, N.W. Washington,

D.C. Written comments on this interim rule must be received by November

9, 1998.

E. Other Amendments to the SPD Content Requirements

In addition to the amendment contained herein, the Department is

publishing in the ``proposed rules'' section of today's Federal

Register a number of proposed amendments to the regulations governing

the content of SPDs. These amendments, upon adoption, will clarify the

information required to be disclosed by group health plans and update

other information required to be set forth in employee benefit plan

SPDs.

Economic Analysis Under Executive Order 12866

Under Executive Order 12866, the Department must determine whether

the regulatory action is ``significant'' and therefore subject to the

requirements of the Executive Order and subject to review by the Office

of Management and Budget (OMB). Under section 3(f), the order defines a

``significant regulatory action'' as an action that is likely to result

in a rule: (1) Having an annual effect on the economy of $100 million

or more, or adversely and materially affecting a sector of the economy,

productivity, competition, jobs, the environment, public health or

safety, or State, local or tribal governments or communities (also

referred to as ``economically significant''); (2) creating serious

inconsistency or otherwise interfering with an action taken or planned

by another agency; (3) materially altering the budgetary impacts of

entitlement grants, user fees, or loan programs or the rights and

obligations of recipients thereof; or (4) raising novel legal or policy

issues arising out of legal mandates, the President's priorities, or

the principles set forth in the Executive Order.

Pursuant to the terms of the Executive Order, it has been

determined that this action is consistent with the President's

priorities with respect to ensuring that all participants in group

health plans receive understandable information about their plans, as

described in the Consumer Bill of Rights and Responsibilities issued by

the President's Advisory Commission on Consumer Protection and Quality

in the Health Care Industry. Therefore, this notice is ``significant''

and subject to OMB review under section 3(f)(4) of the Executive Order.

The cost of compliance with this interim rule is expected to total

$250,949 in 1999, and $387,708 in the year 2000. These costs are

expected to be incurred in connection with other changes to the

required content of SPDs. A detailed discussion of the basis for these

cost estimates, as well as the nature and costs of other changes being

proposed, may be found in the Notice of Proposed Rulemaking with

respect to Proposed Amendments to Summary Plan Description Regulations,

which is also published in today's Federal Register.

Although the effective date of this interim rule differs from the

effective date that may apply for the proposed rulemaking with respect

to SPDs, the Department believes that a meaningful economic analysis

should contemplate as a whole the nature and timing of all changes to

existing SPDs expected to be made by plan administrators due to

regulatory amendments. As a result, the economic analysis of the

Proposed Amendments to Summary Plan Description Regulations addresses

the impact of this interim rule, as well as the changes proposed in the

separate rulemaking action.

To avoid unnecessary duplication of economic analysis, or of public

comment thereon, comments received on the methodology and assumptions

used in estimating the consolidated economic impact of both the

proposed rule and this interim rule, and on the resulting estimates,

will be treated as comments on this interim rule.

The benefits of this interim rule, as yet unquantified, will arise

as participants and beneficiaries receive clearer and more accurate

communications concerning their group health plan benefits. The

Department is publishing this interim rule, in part, to address public

concerns about existing disclosures with respect to exceptions to the

minimum hospital stay provisions of NMHPA.

Regulatory Flexibility Act

The Regulatory Flexibility Act (5 U.S.C. 601 et seq.) (RFA) imposes

certain requirements with respect to Federal rules that are subject to

the notice and comment requirements of section 553(b) of the

Administrative Procedure Act (5 U.S.C. 551 et seq.) and which are

likely to have a significant economic impact on a substantial number of

small entities. If an agency determines that a proposed rule is likely

to have a significant economic impact on a substantial number of small

entities, section 603 of the RFA requires that the agency present an

initial regulatory flexibility analysis at the time of the publication

of the notice of proposed rulemaking describing the impact of the rule

on small entities and seeking public comment on such impact. Small

entities include small businesses, organizations, and governmental

jurisdictions.

Because these rules are issued as interim final rules, and not as a

notice of proposed rulemaking, a formal regulatory flexibility analysis

has not been prepared. Nonetheless, in its analysis of economic impact

of both this interim rule and the Notice of Proposed Rulemaking with

respect to Proposed Amendments to Summary Plan Description Regulations,

which is also published in today's Federal Register, the Department

presents an analysis addressing many of the same issues otherwise

required to be addressed under the RFA.

The Department invites interested persons to submit comments

regarding its preliminary discussion of potential impacts on small

entities. The Department also requests comments from small entities

regarding what, if any, special problems they might encounter under

these interim rules, or if the separate proposal concerning amendments

to the SPD content rules were to be adopted as final, and what changes,

if any, could be made to minimize those problems.

[[Page 48374]]

Paperwork Reduction Act

The Department of Labor, as part of its continuing effort to reduce

paperwork and respondent burden, conducts a preclearance consultation

program to provide the general public and Federal agencies with an

opportunity to comment on proposed and continuing collections of

information in accordance with the Paperwork Reduction Act of 1995 (PRA

95) (44 U.S.C. 3506(c)(2)(A)). This helps to ensure that requested data

can be provided in the desired format, reporting burden (time and

financial resources) is minimized, collection instruments are clearly

understood, and the impact of collection requirements on respondents

can be properly assessed.

Currently, the Pension and Welfare Benefits Administration is

soliciting comments concerning the revision of the information

collection request (ICR) included in this Interim Rule Amending Summary

Plan Description Regulation. A copy of the existing ICR may be obtained

by contacting the office listed in the addressee section of this

notice.

The Department of Labor (Department) has submitted a copy of the

existing information collection, as revised by both the Interim Rule

Amending Summary Plan Description Regulation and the Proposed

Amendments to Summary Plan Description Regulations, to the Office of

Management and Budget (OMB) in accordance with 44 U.S.C. 3507(d) for

review of its information collection provisions. The Department has

requested emergency clearance for that portion of the ICR that is

changed by this interim rule, specifically, the SPD disclosure

provision concerning hospital lengths of stay in connection with

childbirth for the mother or newborn child, by November 9, 1998.

The Department and OMB are particularly interested in comments

that:

Evaluate whether the proposed collection of information is

necessary for the proper performance of the functions of the agency,

including whether the information will have practical utility;

Evaluate the accuracy of the agency's estimate of the

burden of the proposed collection of information, including the

validity of the methodology and assumptions used;

Enhance the quality, utility, and clarity of the

information to be collected; and

Minimize the burden of the collection of information on

those who are to respond, including through the use of appropriate

automated, electronic, mechanical, or other technological collection

techniques or other forms of information technology, e.g., permitting

electronic submission of responses.

Comments should be sent to the individual identified in the

Addressee section of this notice, and to Office of Information and

Regulatory Affairs, Office of Management and Budget, Room 10235, New

Executive Office Building, Washington, D.C. 20503; Attention: Desk

Officer for the Pension and Welfare Benefits Administration. Although

comments may be submitted through November 9, 1998, in light of the

request for emergency clearance by November 9, 1998, submission of

comments within the first 30 days is encouraged to ensure their

consideration.

ADDRESSES (PRA 95): Gerald B. Lindrew, Office of Policy and Research,

U.S. Department of Labor, Pension and Welfare Benefits Administration,

200 Constitution Avenue, NW, Room N-5647, Washington, D.C. 20210.

Telephone: (202) 219-4782; Fax: (202) 219-4745. These are not toll-free

numbers.

I. Background

Pursuant to ERISA section 101(a)(1), the administrator of an

employee benefit plan is required to furnish an SPD to each participant

covered under the plan and each beneficiary who is receiving benefits

under the plan. The SPD is required to be written in a manner

calculated to be understood by the average plan participant and must be

sufficiently comprehensive to apprise the plan's participants and

beneficiaries of their rights and obligations under the plan. To the

extent that there is a material modification in the terms of the plan

or a change in the information required to be included in the SPD,

ERISA requires that the administrator furnish participants covered

under the plan and beneficiaries receiving benefits with a summary of

such changes.

ERISA section 102(b) describes the types of information

specifically required to be included in the plan description and SPD.

The Department has previously issued guidance concerning the required

contents of SPDs in regulations published at 29 CFR 2520.102-3.

II. Current Actions

As described in this preamble, the interim rule amending

Sec. 2520.102-3 modifies the required content of group health plan SPDs

to clarify the applicability of minimum hospital lengths of stay for

mothers and newborn children following childbirth under NMHPA. This

modification to disclosure requirements implemented by the previous

publication of the Interim Rules Amending ERISA Disclosure Requirements

for Group Health Plans (62 FR 16979, April 8, 1997) is intended to

clarify that the attending provider, after consulting with the mother,

may discharge the mother or newborn child earlier than 48 hours

following a vaginal delivery or 96 hours following a cesarean section.

The total additional hour burden estimated to result from this

interim rule is 821 hours in 1999 and 2,219 hours in 2000. This interim

rule is expected to result in operating and maintenance cost increases

of $209,907 in 1999 and $276,741 in 2000. These estimates are based

upon the Department's assumptions concerning the number of affected

plans and participants, the time required to make the modification, and

the percentage of plans that perform the required tasks in-house as

compared with those that purchase services from outside parties. This

accounting for the purchase of services in burden estimates results in

the differences in costs developed for purposes of PRA 95 and those

developed for purposes of Executive Order 12866.

These burden estimates also rely on assumptions made about the

distribution of other disclosure materials required as a result of

proposed regulatory changes. This is because it is assumed that plans

will prepare and distribute revised disclosure materials in the most

cost-efficient way, which would likely involve incorporating as many

changes as possible in a single distribution. A detailed discussion of

the basis for these estimates, as well as the nature and burden

associated with the other changes being proposed to the content of

SPDs, may be found in the Notice of Proposed Rulemaking with respect to

Proposed Amendments to Summary Plan Description Regulations, which is

also published in today's Federal Register.

Because this single ICR is currently the subject of two separate

regulatory actions, the Department believes that a meaningful burden

analysis should contemplate as a whole the nature and timing of all

changes to existing SPDs expected to be made by plan administrators due

to regulatory amendments. As a result, the burden analysis included in

the Proposed Amendments to Summary Plan Description Regulations

addresses the impact of this interim rule, as well as the changes

proposed in the separate rulemaking action. Both the total burden of

the ICR and the burden specifically

[[Page 48375]]

associated with this interim rule are displayed in this notice.

To avoid unnecessary duplication of analysis, or of public comment

thereon, comments received on the methodology and assumptions used in

estimating the consolidated cost and hour burden of the proposed rule

and this interim rule, and on the resulting burden estimates, will be

treated as comments on this interim rule.

Type of Review: Revision of a currently approved collection.

Agency: Pension and Welfare Benefits Administration.

Title: Regulations Regarding Required Contents of Summary Plan

Descriptions for Employee Benefit Plans (Interim Rule Amending Summary

Plan Description Regulation).

OMB Number: 1210-0039.

Affected Public: Individuals or households; business or other for-

profit; not-for-profit institutions.

Frequency of Response: On occasion.

Total Respondents: 2,027,293 (1998); 888,393 (1999); 2,641,818

(2000).

Total Responses: 83,332,000 (1998); 52,115,000 (1999); 160,703,000

(2000).

Estimated Burden Hours: 842,586 (1998); 815,850 total, including

821 for this Interim Rule (1999): 2,101,624 total, including 2,219 for

this Interim Rule (2000).

Estimated Annual Costs (Operating and Maintenance): $95,265,366

(1998); $101,465,306 total, including $209,907 for this Interim Rule

(1999); $218,395,191 total, including $276,741 for this Interim Rule

(2000).

Comments submitted in response to this notice will be summarized

and/or included in the request for OMB approval of the information

collection request; they will also become a matter of public record.

Unfunded Mandates Reform Act

These rules are not subject to the Unfunded Mandates Reform Act of

1995 (Pub. L. 104-4) because they are interim rules. However, for

purposes of the Unfunded Mandates Reform Act, as well as Executive

Order 12875, this interim rule does not include any Federal mandate

that may result in expenditures by State, local, or tribal governments,

or the private sector, of $100 million or more. The basis for this

statement is described in the analysis of costs for purposes of

Executive Order 12866 and the Regulatory Flexibility Act.

Small Business Regulatory Enforcement Fairness Act

This interim rule is subject to the provisions of the Small

Business Regulatory Enforcement Fairness Act of 1996 (5 U.S.C. 801 et

seq.) (SBREFA), and has been transmitted to Congress and the

Comptroller General for review. The Department has determined that this

is not a ``major rule'' as that term is defined in 5 U.S.C. 804,

because it is not likely to result in: (1) an annual effect on the

economy of $100 million or more; (2) a major increase in costs or

prices for consumers, individual industries, or federal, State, or

local government agencies, or geographic regions; or (3) significant

adverse effects on competition, employment, investment, productivity,

innovation, or on the ability of United States-based enterprises to

compete with foreign-based enterprises in domestic or export markets.

Statutory Authority

This interim regulation is adopted pursuant to authority contained

in section 505 of ERISA (Pub. L. 93-406, 88 Stat. 894, 29 U.S.C. 1135)

and sections 104(b) and 734 of ERISA, as amended, (Pub. L. 104-191, 110

Stat.1936 and Pub. L. 104-204, 110 Stat. 2935, 29 U.S.C. 1024 and

1191c) and under Secretary of Labor's Order No. 1-87, 52 FR 13139,

April 21, 1987.

List of Subjects in 29 CFR Part 2520

Employee benefit plans, Employee Retirement Income Security Act,

Group health plans, Pension plans, Welfare benefit plans.

For the reasons set forth above, Part 2520 of Title 29 of the Code

of Federal Regulations is amended as follows:

PART 2520--[AMENDED]

1. The authority for Part 2520 continues to read as follows:

Authority: Secs. 101, 102, 103, 104, 105, 109, 110, 111(b)(2),

111(c), and 505, Pub. L. 93-406, 88 Stat. 840-52 and 894 (29 U.S.C.

1021-1025, 1029-31, and 1135); Secretary of Labor's Order No. 27-74,

13-76, 1-87, and Labor Management Services Administration Order 2-6.

Sections 2520.102-3, 2520.104b-1 and 2520.104b-3 also are issued

under section 101(a) of Pub. L. 104-191, 110 Stat. 1936 and 1939,

sec. 603 of Pub. L. 104-204, 110 Stat. 2935 (29 U.S.C. 1185 and

1191c).

2. Section 2520.102-3 is amended by revising paragraph (u) to read

as follows:

Sec. 2520.102-3 Contents of summary plan description.

* * * * *

(u) In the case of a group health plan, as defined in section

733(a)(1) of the Act, that provides maternity or newborn infant

coverage, a statement indicating the following: Group health plans and

health insurance issuers generally may not, under Federal law, restrict

benefits for any hospital length of stay in connection with childbirth

for the mother or newborn child to less than 48 hours following a

vaginal delivery, or less than 96 hours following a cesarean section.

However, Federal law generally does not prohibit the mother's or

newborn's attending provider, after consulting with the mother, from

discharging the mother or her newborn earlier than 48 hours (or 96

hours as applicable). In any case, plans and issuers may not, under

Federal law, require that a provider obtain authorization from the plan

or the issuer for prescribing a length of stay not in excess of 48

hours (or 96 hours).

* * * * *

Signed at Washington, D.C., this 28th day of August, 1998.

Meredith Miller,

Deputy Assistant Secretary for Policy, Pension and Welfare Benefits

Administration, U.S. Department of Labor.

[FR Doc. 98-24066 Filed 9-4-98; 8:45 am]

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